The highly anticipated Union Budget week has arrived, marking a pivotal moment for the Indian stock market. The recent bull run, leading up to the Budget session, reflects strong investor sentiment fueled by expectations of policy announcements and support for domestic cyclicals and growth-oriented sectors in the upcoming Union Budget 2024.
Domestic equity benchmarks Sensex and Nifty experienced minor gains last week, extending their winning streak to seven weeks. However, a sharp decline in the previous session erased most of the weekly gains. On Friday, investors rushed to book profits following four days of record-breaking rallies and a global sell-off triggered by an IT outage causing widespread device crashes.
The rally in benchmark indices last week was driven by IT stocks, buoyed by strong Q1FY25 performance and expectations of a US Federal Reserve interest rate cut. Notably, the BSE benchmark hit the 81,000-mark for the first time on Thursday.
GIFT Nifty traded down by 117.50 points or 0.48% at 24,416.50 indicating a negative opening for domestic indices NSE Nifty 50 and BSE Sensex on Monday. Previously, on Friday, the NSE Nifty 50 ended down by 269.95 points or 1.09% to settle at 24,530.90 while the BSE Sensex fell 738.81 points or 0.91% to 80,604.65.
“Markets experienced profit-taking and shed nearly a percent, erasing the gains of the previous trading session. After a flat start, the Nifty gradually declined throughout the day, ultimately closing near the day’s low at 24,530.90 level. Most sectors ended lower, with metals, realty, and energy being the top losers. The broader indices also faced pressure, dropping over 2% each,” said Ajit Mishra – SVP, Research, Religare Broking.
Mishra also added that This decline signals caution ahead of the Union Budget, as participants chose to book profits. We may see further dips in the Nifty, with the next crucial support at the 24,150 level, corresponding to the 20 DEMA. Traders are advised to avoid aggressive positions and opt for hedged trades. It is also recommended to focus on index majors rather than midcap and smallcap stocks for now.
Key things to know before share market opens on July 22, 2024
Wall Street
U.S. stocks extended their slump on Friday as lingering chaos related to a global technical outage caused by a software glitch added uncertainty to an already-anxious market, reported Returns. The tech-heavy Nasdaq Composite ended down by 144.28 points or 0.81% at 17,726.94. The S&P 500 ended lower by 39.59 points or 0.71% at 5,505, while the Dow Jones Industrial Average ended lower by just 377.49 point or 0.93% at 40,287.53.
Joe Biden Quits US Presidential race
U.S. President Joe Biden has announced his withdrawal from the presidential race, leaving the Democratic nomination in a state of uncertainty just months before the November election against former President Donald Trump.
The announcement, made via the social media platform X, comes in the wake of mounting pressure from party leaders, donors, and organizers who have increasingly questioned Biden’s viability as a candidate. This decision throws the Democratic Party into disarray as it scrambles to find a new contender to face Trump in the upcoming election.
US Dollar
The US Dollar Index (DXY), which measures the value of the dollar against a basket of six foreign currencies, traded down by 0.11% at 104.26.
Crude Oil
WTI crude prices are trading at $79.05 down by 1.21%, while Brent crude prices are trading at $83.10 up by 0.63%, on Monday morning.
Asian Markets
Shares in the Asia-Pacific region are trading in mixed territory on Monday morning. The Asia Dow is trading up by 1.71%, where as the Japan’s Nikkei 225 is trading in red, down by 0.77%, Hong Kong’s Hang Seng index is traded marginally lower by 0.06% and the benchmark Chinese index Shanghai Composite ended down by 0.26%.
FII, DII Data
Foreign institutional investors (FII) bought shares worth Rs 1,506.12 crore, while domestic institutional investors (DII) offloaded shares worth Rs 461.56 crore on July 19, 2024, according to the provisional data available on the NSE.
F&O Ban
The NSE added Balrampur Chini Mills, Bandhan Bank, GMR Airports Infrastructure, Hindustan Aeronautics, Hindustan Copper, India Cements, Piramal Enterprises, SAIL, Vedanta in F&O on July 22, 2024.
Technical View
Commenting on the Technical outlook of Nifty Rupak De, Senior Technical Analyst, LKP Securities, said On the daily chart, the Nifty has formed a bearish engulfing pattern, suggesting a possible bearish reversal in the market. The RSI is showing negative divergence, indicating a shift in price momentum. Additionally, the daily RSI has entered a bearish crossover and is emerging from the overbought zone. On the lower end, support is placed at 24,500, below which the index might drift down to 24,400-24,200. On the higher end, resistance is placed at 24,650-24,700.
Bank Nifty Outlook
“The Bank Nifty formed a bullish engulfing pattern following a consolidation. Additionally, the index found support at the 21 EMA, and the RSI has entered a bullish crossover. The trend is likely to remain positive as long as the index stays above 52,000. On the higher end, it might move towards 53,000/53,300 in the short term,” said Rupak De, Senior Technical Analyst, LKP Securities.
